Hong Kong has been ranked the fifth most competitive place in the world by the International Institute for Management Development (IMD), up from seventh last year.

The IMD’s World Competitiveness Yearbook takes into account a host of factors, including government efficiency, business efficiency, economic performance and infrastructure.

In response to the ranking, a spokesman for the SAR government said on Wednesday that: “Hong Kong’s competitiveness is underpinned by our institutional strengths under 'One Country, Two Systems', including the rule of law and judicial independence, free flow of capital, a free trade and investment regime, a simple and low tax system, a favourable business environment and an efficient government.”

"We have every confidence in Hong Kong's long-term economic development and competitiveness," the spokesman added in a statement.

The Switzerland-based institute named Denmark the most competitive country – for the first time in the annual report's 34-year history.

Switzerland came in second, followed by Singapore and Sweden. The United States was ranked 10th and China took 17th place.

The United Kingdom, meanwhile, was named the 23rd most competitive country.